Households struggling with near-£1,700-a-year gas and electricity bills that look set to seesaw over the coming months may want to consider a fixed-rate deal that could save them 12%, or £150, next winter.
Last week, the regulator, Ofgem, announced the price cap that governs what most UK households pay will fall from an average of £1,690 a year to £1,568 on 1 July.
While that sounds like welcome news, it means average household energy bills are still £400 a year more than three years ago, and they look set to rise again in October.
In a normal world, Guardian Money would be advising readers to seek out a cheaper supplier and switch to it. The problem is, there just aren’t the sorts of deals around that there used to be. The invasion of Ukraine and the resulting spike in energy prices forced many smaller energy suppliers – those that in the past would have undercut their bigger rivals – out of business.
That said, at the time of writing we reckon there are three fixed-rate deals worth considering.
Top of the pile is Ecotricity’s 1 Year Green 12-month fix, which will cost £1,540 a year based on average use. That is a 9% discount on today’s average prices – or a 2% discount after the 1 July price cap fall feeds through to people’s bills.
Currently, the prediction from the analysts at Cornwall Insight is that a typical capped dual-fuel bill is set to rise by 12% to £1,761 a year on 1 October, and to remain at that level until the spring.
That is by no means set in stone but, if it happens, those who sign up to the Ecotricity tariff will be paying about 12.5% less for their fuel next winter than if they stayed on a price-capped tariff, according to Uswitch. That could easily amount to a £150-£200 saving, or more than that for bigger households.
The downside to the Ecotricity deal is that it comes with a £75 exit fee for each fuel, gas and electricity – plus you need to have, or agree to have, a smart meter installed.
Rival supplier Outfox the Market’s v1.0 12-month fix is priced at £1,576 a year and could offer a 10.5% saving next winter, while Octopus Energy has a similar deal (£1,611 a year) offering an 8.5% saving – but only if prices go up as predicted. That last deal is free of exit penalties, meaning that if the market shifts and cheaper deals emerge, you can easily switch.
According to Uswitch, the other big suppliers’ fixed-rate deals will in effect offer a 7% discount next winter, but only after the predicted price rises. Of course, if the Ukraine conflict ends and markets return to something near normal, you could find yourself on a more expensive deal than those on a capped tariff or a cheaper new tariff.
Elise Melville, an energy expert at Uswitch.com, says the number of fixed deals available to households has improved dramatically since the worst days of the energy crisis.
“It’s impossible to know for certain what energy rates will be in six, nine or 12 months’ time, but while prices continue to fluctuate, opting for a fixed deal while rates are low will give households at least a year of stability and potentially some savings. There are several fixed deals on the market that are cheaper than the current price cap – some up to £150 a year for the average household – and even one that costs less than the upcoming July cap.”
She adds that while future predictions are like crystal ball gazing, if they ring true, many of the current deals could offer savings against the potentially higher winter rates.
